Reserve Bank of Malawi Governor Dalitso Kabambe has challenged the banking sector to support four key sources of economic growth for the country as spelt out in the Malawi and Growth and Development Strategy (MGDS).
The development blue print spells out agriculture, tourism, manufacturing and mining as the four key sources of economic growth.
“As a country, we have all agreed that these are the four key sources of growth for our economy. As a banking sector with which to find ways we can fully support these sectors,” said Kambambe.
Malawi has a total of nine commercial banks with a combined asset value of K2 trillion, a significant jump from a total asset value of K531 billion and K1.3 trillion in 2013 and 2017, respectively.
The banks also have a combined deposits or savings accumulation of K1.1 trillion, out of which only K512.9 billion has been loaned out to the private sector, a situation Kabambe said is worrisome as it implies that the private sector is being denied the much-needed resources in form of financial capital.
The central bank Governor was speaking in Lilongwe during a dinner gala celebrating the 50th anniversary for Malawi’s oldest bank, Standard Bank Malawi.
Malawi is currently implementing a fourth generation of its medium term development strategy, the MGDS 111 which was launched in 2018 by President Peter Mutharika under the theme ‘Building a Productive, Competitive and Resilient Nation’.
The strategy covers a period of five years from 2017 to 2022 and is a successor document to MGDS II.
“We need to develop tailor made products, which will answer to the needs of these sectors. Malawi is such a blessed nation. We have all these resources at our disposal. We now know that from Nsanje to Chitipa, this country has precious minerals and metals of all sorts and types. We also have oil and gas,” Kabambe said.
He said the banks need to be proactive and unearth various opportunities that are available in the four sectors underpinning MGDS 111.
The Governor also reminded banks of their intermediation role of mobilising savings from areas of surplus and direct them to areas of investments and capital formation.
From a financial stability perspective, Kabambe assured banks that, just like other central banks across the globe, RBM has also reviewed regulatory regimes of financial institutions with particular attention to avert a repeat of the 2008 global financial crisis. The regulatory frameworks and environments have since been strengthened to prevent systemic risks in the financial system, said Kabambe.
The objective of the MGDS 111 is to make Malawi a productive, competitive and resilient nation through sustainable agriculture and economic growth, energy, industrial and infrastructure development while addressing water, climate change, and environmental management and population challenges.